Forest gives rise to village bank

The Kaya Kinondo forest of Kwale, Kenya, is awash with all the beauty and splendor a coastal forest should have. It is one of the oldest forests on Kenya’s south coast. Rare bird and plant species populate this awesome ecosystem, along with huge indigenous trees that are imposing in nature and magnificent in splendor.

Forty-five butterfly species – 5 per cent of those known in Kenya – are found in this great forest. The extremely rare Zanj elephant shrew, along with the threatened colobus monkey, make their homes in this magnificent landscape. The Kaya Kinondo forest is also of great cultural and spiritual importance to the Digo people in Kenya.

This dynamic environment also boasts something that doesn’t fly or run, has no roots or leaves, but has become an essential part of daily life for the residents of Kwale, and may even help keep the forest healthy. It’s a village bank.
‘Very good trees’
Client after client comes into the Kaya Kinondo Financial Services Association to either deposit or withdraw money. This bank has no ATMs or free pens, but it does provide effective and efficient financial services to community members within and around the Kaya Kinondo forest area.

According to 50-year-old mother of six Zainab Ahmed, the success of their village bank would have been put in serious jeopardy had the community not realized what immense economic potential their forest has, and acted on it.

“Kaya Kinondo has very good trees. We were beginning to use the forest badly, cutting many trees from it to make charcoal. This was badly affecting the forest and slowly destroying it.”

It is at this point that Zainab and her neighbors realized that there is indeed a better way to co-exist with and even benefit from the forest.

“In 2003, we decided to come together and start an eco-tourism project. We sold carvings and introduced our rich culture to tourists along a trail in the Kaya Kinondo forest,” Zainab says.

Through this simple venture, the community in and around Kaya Kinondo began to see the economic value of forest conservation. Money begun streaming in, and the community faced a new challenge.

“We were getting all this money, but we had nowhere to take it because at that time, banks were really expensive and inaccessible,” says Zainab.

Banking on nature
It was at this point that WWF, supported by the UN Development Programme's Global Environmental Facility, the Ford Foundation and Critical Ecosystem Partnership Fund, introduced the idea of banking in the village, for the village, by the village. In addition to the bank component, the project worked with people who earned their living by making charcoal or selling firewood with the aim of helping them shift to more forest-friendly enterprises such as growing tree seedlings, eco-tourism and various agricultural projects, such as chicken farming.

“We helped create Kaya Kinondo Financial Services Association in order to help communities in Kwale invest their revenue in environmentally viable businesses that would keep their forests profitable while also conserving them,” says WWF’s Elias Kimaru, who works on the project.

Training was carried out for community members to help them invest wisely and ensure that the bank is sustainable and continues to benefit the community and the environment.

"In every village, WWF trained one person on how to set up and run a village bank. This was an important move because we had previously seen other village banks start and then die because of mismanagement. We did not want our bank to fail. After the training, we started the bank with 153 members who bought shares at $3 each,” explains Zainab.

Client numbers were low at first because villagers were not convinced that their money would be safe in a village bank. As Zainab recalled, other banks had been set up and had folded; the families of Kwale can’t afford that kind of financial risk.

Growing strong
Two years down the line, in 2005, the bank was still open, and more and more members enrolled.

But the community realized they needed to learn more and expand the menu of financial services offered, if they were to stay competitive with other micro-finance institutions that had moved into the area.

“In 2005, WWF offered us training on how to manage loans as a bank, and we began providing business loans of up to $50 to our members,” notes Zainab.

By 2011, more than 130 members had taken loans amounting to $60,000. From a desire to protect their forest and promote their culture, the members of Kaya Kinondo Financial Services Association have created a strong and growing community institution. With 153 members with a net worth of $3,000 in 2003, to 689 members with a net worth of close to $100,000 today, the village bank is indeed a testament to the fact that human beings can live in harmony with nature.